Who’s Your CFO?

More and more SMBs are having success with outsourcing this key position

For most small businesses, there are usually only two answers to the question.

  1. You (the owner) are the CFO (sort of), or
  2. There is no CFO (often expressed as, we don’t need a CFO)

That second answer is indicative of a management trap mindset of only doing “what is necessary to get it done.”  That typically means longer hours since the business day is spent taking care of customers, getting the work finished and tending to front line employees.  One day ends late and the next starts early, leaving little time for planning, budgeting developing systems necessary to grow the business, much less overseeing the accounting function.

Just what is a CFO?  Most small businesses first think more about a Controller who is responsible responsible for the accounting operations of the company to include financial reports, maintenance of adequate accounting records, and a comprehensive set of controls and budgets to ensure that reported results comply with generally accepted accounting principles.

Controllers complete tasks — CFOs compose planning. And as with most everything else, failing to plan on financial strategy often equates to planning to fail.

Strategy Matters

The chief financial officer develops a financial and operational strategy, devises metrics tied to that strategy, and supervises the monitoring of control systems designed to preserve company assets and report accurate financial results. At the end of the day, the CFO is accountable for the administrative, financial, and risk management operations of the company.   

In the small business environment, the position becomes broader still, because routine systems are often nonexistent or in great need of refinement. Somebody has to establish and communicate policy while also developing rudimentary procedures to deliver consistent products or services. Since payroll is often one of a company’s largest costs, human resource responsibilities are assigned to the small business CFO.

Trusted Advisor

Structured most effectively, the CFO position often includes Controller, Human Resources, Risk Management, Public Relations and overall Administrative Management, allowing the business owner to focus on customers, products and growth. Essentially, the position ought to function as a trusted strategic advisor to the business owner.

The successful chief financial officer is a degreed accountant with a Certified Public Accountant or Certified Management Accountant designation. Firsthand experience working with small business is critical.  Most with “big business” experience do not understand the entrepreneurial mindset of the small business owner.  Communication skills, both written and oral are essential.

Affordable Solution

Sadly, most small to medium-size business simply can’t afford to add this position to their payroll, even while experiencing rapid growth and upside potential for sustained growth.  The beauty of outsourcing is its scale-ability and affordability: CFO engagements can be customized to meet organizational needs and maintain operational budgets.

An assessment of company plans and objectives can result in an overall long-term plan that can affordably produce positive, demonstrative results for the business. Modern technology makes it much easier for an outsourced CFO to work remotely, making the best use of allocated hours. Skype and screen sharing applications (like GoToMeeting) make staff training and review efficient and time saving.  

Some typical responsibilities that can be outsourced to an experienced small business CFO include: